Most fintech founders think RBI rules only apply to banks

It’s been an interesting week.

I’ve been getting more client calls from some prominent players in the fintech space - founders and companies I’ve followed and admired for years. It’s one of those quiet moments that remind you that consistency works.

The small, often invisible efforts - posting regularly, staying connected, showing up even when results aren’t instant - all of them compound quietly until one day, people start noticing.

Of course, not everything moves at the same pace. The search for podcast guests continues, and while some companies have formal approval processes that make it slower than I’d like, I’ve learned that patience is part of the work. In law, in business, in content - good things take time.

But there’s a bigger reflection that’s come out of these conversations: people who give advice without context have usually never done the work. They speak in absolutes, without nuance. And in industries like fintech, that lack of understanding isn’t just annoying - it’s dangerous.

Because this is one of those sectors where missing context doesn’t just cause confusion. It causes regulatory trouble.

And that brings me to today’s lesson.

The RBI Doesn’t Care What You Call Yourself

Most fintech founders assume RBI rules only apply to banks.

That’s exactly how they get caught.

You can have a brilliant product, a strong technical team, and an innovative business model. But the moment your product touches a regulated financial function - payments, lending, credit scoring, or even KYC verification — you’re automatically within the RBI’s jurisdiction.

It doesn’t matter whether you call yourself a platform, a technology enabler, or an aggregator. If you facilitate or support regulated financial activity, you’re expected to follow the same standards that licensed entities follow.

Here’s how the problem usually unfolds:

A startup builds something exceptional. They move fast, sign up clients, integrate APIs, and ship features. Everything looks perfect on the surface - until the compliance team at a partner institution reviews the contract.

That’s when the cracks appear.

No mention of data localization.

No clause on regulator or audit access.

No clarity on confidentiality protocols or incident reporting.

And suddenly, what started as a partnership opportunity turns into a termination notice.

Because no bank or NBFC can afford to work with a vendor that leaves them exposed to compliance risk. They’re not reacting emotionally - they’re protecting their license.

So the reality is simple: it’s not about whether you call yourself a “bank” or a “tech company.”

If your product touches regulated activities, you play by the financial system’s rules.

What You Can Do

If you’re building in fintech, compliance cannot be an afterthought. It has to be part of your product’s DNA from day one.

Here are some immediate steps you can take to stay aligned:

1. Verify your regulatory scope.

Before launching, integrating, or partnering, check whether your product or process falls under RBI oversight. Even if you’re operating in a gray area, it’s safer to confirm. “We didn’t know” doesn’t hold up when a regulator comes knocking.

2. Update your contracts.

Your agreements should clearly define the compliance expectations that both sides must follow. That includes:

a) Data storage and localization requirements

b) Regulator and audit access rights

c) Confidentiality and data-sharing protocols

These aren’t optional - they’re the baseline for any serious financial partnership.

3. Get compliance visibility.

Know what your partners are required to follow, and understand where your responsibilities begin and end. This visibility ensures you don’t unknowingly create exposure for your client or yourself.

Because in fintech, your credibility is built on compliance.

When a client chooses to work with you, they’re trusting that your processes won’t put their license - or their reputation - at risk.

TL;DR

If you’re in fintech, RBI rules apply the moment your product touches regulated functions like payments, lending, credit scoring, or KYC. It doesn’t matter what you call yourself - “tech company” or otherwise.

To avoid compliance fallout:

a) Verify your regulatory exposure early.

b) Update contracts with data and audit clauses.

c) Understand your clients’ compliance obligations.

In fintech, compliance isn’t just a formality - it’s your foundation for long-term credibility and partnerships.

Conclusion

Every fintech founder dreams of scaling fast, onboarding big clients, and disrupting traditional finance. But speed without structure doesn’t last.

The RBI doesn’t care about labels - it cares about responsibilities. And the sooner you internalize that, the smoother your growth becomes.

Because compliance, when done right, isn’t a restriction. It’s what keeps your partnerships strong, your product credible, and your brand trusted.

So before you chase the next big deal, pause and ask yourself one question - have we truly built with compliance in mind?

That answer often decides which fintechs stay - and which ones get shut out of the system.